Canada Gazette, Part I, Volume 158, Number 44: Regulations Amending the Pension Benefits Standards Regulations, 1985 (Publication of Information Relating to the Investments of Plans)

November 2, 2024

Statutory authority
Pension Benefits Standards Act, 1985

Sponsoring department
Department of Finance

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

Information related to the investments of federally regulated private pension plans is currently not publicly available in a uniform and standardized format. While some large federally regulated pension plans publicly disclose information on the distribution of their investments by geographic jurisdiction and asset class, the information can be presented using varying asset categories or geographic locations, making it difficult to compare the distribution of investments between pension plans.

Background

The federal Pension Benefits Standards Act, 1985 (PBSA) and Pension Benefits Standards Regulations, 1985 (PBSR) apply to pension plans that are linked to employment that falls under federal jurisdiction, such as work connected to navigation and shipping, banking, interprovincial transportation and communications, employment in certain federal Crown corporations, and all private sector employment in Yukon, the Northwest Territories and Nunavut. Approximately 7% of private pension plans in Canada are federally regulated with the remaining 93% of plans being provincially regulated. The PBSA and PBSR do not apply to the federal public service, Canadian Forces or Royal Canadian Mounted Police pension plans. The Office of the Superintendent of Financial Institutions (OSFI) is responsible for the supervision of federally regulated pension plans under the PBSA and PBSR.

The primary purpose of a pension plan is to provide pension benefits to plan beneficiaries to support their retirement security. The PBSA and PBSR support this purpose by establishing minimum standards for plan administration to safeguard the pension benefits of plan beneficiaries (e.g. active members, deferred members, and retirees). Under the PBSA and PBSR, plan administrators have a fiduciary duty to manage plan assets and make investment decisions in the best financial interest of plan beneficiaries.

Federally regulated pension plans are either defined benefit (DB) or defined contribution (DC). Under a DB plan, employers and employees contribute to the plan and plan members receive a set level of regular payments from the plan throughout their retirement, typically based on their salary and years of service. Under a DC plan, employer and employee (if any) contributions are usually predetermined at a fixed percentage of salary. A DC plan member’s pension benefits at retirement are determined based on their account balance at retirement, which depends on the amount of accumulated employer and employee contributions and investment returns. A combination plan is one with both DB and DC elements.

According to OSFI, as of March 31, 2023, there are 1 180 federally regulated pension plans with total assets of $238 billion. Federally regulated pension plans are required to provide annual disclosures to OSFI and plan beneficiaries that contain information on plan investments, funding levels, governance and administration, and demographic information of plan members and retirees. Federally regulated pension plans vary widely in terms of size; many are relatively small and do not issue public reporting documents on their investments. There are about 50 federally regulated plans that have more than $500 million in assets. These plans are largely composed of DB or combination plans (i.e. include both DB and DC provisions) and represent almost 90% ($210 billion) of federally regulated plan assets.

In the 2023 Fall Economic Statement, the government announced its intention to require large federally regulated private sector pension plans to disclose information regarding the distribution of plan investments by jurisdiction and by asset class by jurisdiction to OSFI in a standard format that will be made publicly available. Subsequently, Budget 2024 announced that the PBSA would be amended to enable and require the Superintendent of Financial Institutions to publish prescribed information related to the investments of certain federally regulated pension plans. This legislative amendment received royal assent on June 20, 2024, as part of Bill C-69, the Budget Implementation Act, 2024, No. 1.

Objective

The objective would be to improve the transparency of the investments of large federally regulated pension plans for Canadians by operationalizing the 2023 Fall Economic Statement and Budget 2024 commitments to have OSFI make publicly available the distribution of their investments by jurisdiction and by asset type. This would help plan members and retirees to better understand where their pensions are being invested.

The Regulations Amending the Pension Benefits Standards Regulations, 1985 (Publication of Information Relating to the Investments of Plans) [“the proposed amendments” or “the Regulations”] would also demonstrate the government’s commitment to improving pension investment transparency and may help encourage provinces to implement similar disclosures to improve the transparency of Canadian pension plan investments across the country. While many large public sector plans in Canada already publicly disclose investment information by jurisdiction and/or asset class, it is not a harmonized approach. Encouraging adoption of the federal disclosures would improve harmonization and data comparability.

Description

The proposed amendments would prescribe the types of information (e.g. jurisdictions and categories of plan assets) that must be disclosed by OSFI on the investments of federally regulated pension plans with assets under management greater or equal to $500 million. This threshold would include 50 plans, predominantly DB and combination plans, representing 89% of federally regulated pension plan assets. The proposed amendments would prescribe the information OSFI is required to publish and how it would be presented.

Under the proposed amendments, OSFI would be required to publish the following investment information: assets under management, by dollar amount (market value) and percentage of total assets, for each geographic location, and by asset class within each geographic location. The asset classes would include public equity, private equity, bonds, infrastructure, real estate and short-term assets. The geographic locations would include Canada, the United States, Europe, China, Asia-Pacific region (excluding China), Latin America, and others. The information will also be required to be presented by defined benefit plan assets and defined contribution plan assets for all plans in aggregate, as well as by employer name for single-employer plans and by plan name for multi-employer plans. The proposed amendments would require OSFI’s initial publication of investment information to cover the 2022, 2023 and 2024 plan years.

Regulatory development

Consultation

Following the initial announcement in the 2023 Fall Economic Statement, the Deputy Prime Minister and Minister of Finance raised the proposal with her provincial counterparts at a Finance Ministers’ Meeting. Several Ministers of Finance expressed support for the proposal but were also interested in additional information on the proposal, such as the potential asset categories and geographic locations. The selected asset categories and locations were chosen to remain consistent with similar data tables published by Statistics Canada in their survey of trusteed pension plans.

The Department of Finance (the Department) has informally engaged with some provincial officials, with a view to encouraging alignment of information to be disclosed with any provinces that choose to put in place similar requirements.

The 30-day comment period during prepublication in the Canada Gazette, Part I, will provide an opportunity to receive comments on the specifics of the proposed amendments (i.e. the proposed geographic locations and asset classes to be disclosed by OSFI).

Modern treaty obligations and Indigenous engagement and consultation

The proposed amendments are not expected to have any differential impacts on Indigenous Peoples or implications for modern treaties, as per the Government’s obligations in relation to rights protected by section 35 of the Constitution Act, 1982, modern treaties, and international human rights obligations.

Instrument choice

The 2023 Fall Economic Statement announced that the Government would require large federally regulated private sector pension plans to disclose information regarding the distribution of plan investments by jurisdiction and by asset class by jurisdiction to OSFI in a standard format that will be made publicly available. Subsequently, Budget 2024 re-announced the proposal and introduced amendments to the PBSA to require that OSFI publish prescribed information related to the pension plan investments of prescribed federally regulated pension plans. The proposed amendments are required to operationalize these commitments. Therefore, no other instruments were considered.

Regulatory analysis

Benefits and costs

The proposed amendments are not expected to result in material incremental costs to be carried by businesses, the Government or Canadians/consumers. The proposed amendments would result in OSFI requesting additional information from plan administrators regarding the distribution of their investments by jurisdiction and asset type, which OSFI would then be required to make publicly available.

Businesses

The proposed amendments are expected to require plan administrators to request additional information or reports from plan actuaries and/or investment managers, which is not anticipated to result in material costs to the administrator or the pension funds. Preliminary consultations indicate that as the information to be requested already exists in plan investment records, the cost to provide it would be minimal and that in many cases, it would be covered by fixed costs that actuaries and investment managers charge to their pension fund clients to prepare reports.

Pension plan administrators will also be required to submit additional information to OSFI to meet the requirements of the proposed amendments through either extra fields in OSFI’s existing data collection process or through a new form. It is not expected that this additional work would result in any material increase in the cost to submit information to OSFI. In addition, given the expected immateriality, the additional cost would be difficult to quantify.

Government

The proposed amendments would standardize data collection on investments, which would help improve the supervision of federally regulated pension plans by having more comparable information related to investments.

OSFI is expected to carry some initial costs to implement the new disclosure requirements, and ongoing costs to collect the information required and make it publicly available on its website are expected to be minimal. OSFI recovers the cost of supervising federally regulated pension plans through assessment fees that are charged to pension plans, based on plan size (as measured by the number of plan beneficiaries). The costs of the proposed amendments to OSFI would be covered by existing resources and are not expected to have a material impact on the basic rate for assessment of pension plans.

Canadians/Consumers

The proposed amendments would improve the transparency of the distribution of pension plan investments for Canadians, which would help plan members and retirees to better understand where their pensions are being invested. They would not result in any additional costs to Canadians or consumers.

Small business lens

The proposed amendments would result in additional disclosures to OSFI from federally regulated private pension plans with more than $500 million in assets under management. Given this asset threshold, and the fact that small businesses generally do not offer registered pension plans to their employees, the proposed amendments would not apply to any small businesses.

One-for-one rule

The proposal would not introduce or repeal any regulatory titles.

In order for OSFI to meet the requirements under the proposed amendments to publish the prescribed information related to plan investments, plan administrators would be required to submit more granular information regarding the distribution of their investments by jurisdiction and by asset type from the information currently collected by OSFI. The information that will be published is a more detailed breakdown of information that plan administrators already provide to OSFI as part of their annual information returns.

The additional information may be collected through a new temporary procedure for the first year after the Regulations come into force. This will allow OSFI to make the necessary changes to its annual information return procedure to capture the required investment data for subsequent years.

Preliminary consultations with plan administrators indicate that there would not be any additional administrative burden imposed on plan administrators by submitting more granular investment information to OSFI, with regard to both the additional information submitted as part of the annual information return and the temporary collection procedure for the first year after the Regulations come into force.

Regulatory cooperation and alignment

The proposed amendments are not part of a formal regulatory cooperation initiative. Before the announcement on investment disclosures was made, the Department of Finance undertook an analysis of the investment data of Trusteed Pension Funds across Canada available from Statistics Canada, as well as of data from the annual reports of large provincially regulated pension plans to better understand the current pension investment landscape. The conclusion was that it was difficult to have consistent data across the federal and provincial jurisdictions due to the differing methods of collecting and reporting investment data.

The 2023 Fall Economic Statement and Budget 2024 announced the Government would engage with provinces and territories to discuss similar disclosures by Canada’s largest pension plans in a simple and uniform format.

Effects on the environment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that the Regulations would not result in important positive or negative environmental impacts nor do they involve a high level of uncertainty or risk regarding the outcomes of the proposal that makes it difficult to assess the potential environmental impacts.

Gender-based analysis plus

This proposal would benefit the plan beneficiaries of federally regulated private pension plans with more than $500 million in assets under management (approximately 50 plans). Approximately 45% of active workers participating in federally regulated pension plans are women. Therefore, women constitute a slight minority of members in federal plans, though the impact of the proposal would not vary based on identity characteristics. There is no data available on gender or other characteristics of the retirees of federally regulated pension plans.

Implementation, compliance and enforcement, and service standards

Implementation

The Regulations would come into force on the day that section 184 of the Budget Implementation Act, 2024, No. 1 comes into force, but if they are registered after that day, they come into force on the day on which they are registered.

The Office of the Superintendent of Financial Institutions (OSFI) supervises federally regulated private pension plans and ensures that they are in compliance with the PBSA, the PBSR, and any regulations made under the PBSA, including the proposed amendments. Costs related to implementing the proposed amendments are expected to be minimal and fully covered by OSFI’s existing resources. After the proposed amendments are in force, OSFI will be required to begin publishing the information set out in the Regulations on an annual basis.

Contact

Kathleen Wrye
Director
Pensions Policy
Financial Crimes and Security Division
Department of Finance Canada
90 Elgin Street, 13th Floor
Ottawa, Ontario
K1A 0G5
Email: re-pension@fin.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council proposes to make the annexed Regulations Amending the Pension Benefits Standards Regulations, 1985 (Publication of Information Relating to the Investments of Plans) under subsection 39(1)footnote a and section 40.1footnote b of the Pension Benefits Standards Act, 1985 footnote c.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website but if they use email, mail or any other means, the representations should cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Kathleen Wrye, Director, Pensions Policy, Financial Crimes and Security Division, Department of Finance, 90 Elgin Street, 13th Floor, Ottawa, Ontario K1A 0G5 (email: re-pension@fin.gc.ca).

Ottawa, October 24, 2024

Wendy Nixon
Assistant Clerk of the Privy Council

Regulations Amending the Pension Benefits Standards Regulations, 1985 (Publication of Information Relating to the Investments of Plans)

Amendment

1 The Pension Benefits Standards Regulations, 1985 footnote 1 are amended by adding the following after section 15:

Information Relating to the Investments of Plans

15.1 (1) For the purposes of section 40.1 of the Act, a prescribed plan is one that has a total market value of assets equal to or greater than $500 million at the end of its plan year.

(2) The information that relates to the investments of any plan referred to in subsection (1) that must be published by the Superintendent in accordance with section 40.1 of the Act is, for each geographic location set out in subsection (3), the market value of plan assets invested in each class of assets set out in subsection (4) at the end of the plan year, expressed in dollars and as a percentage of total assets.

(3) The geographic locations are the following:

(4) The classes of assets are the following:

(5) The end of the plan year referred to in subsections (1) and (2) is one that ends after January 1 of the applicable calendar year but before January 2 of the following calendar year.

(6) Despite subsection (2), the information that relates to the investments of any plan referred to in subsection (1) that must be published by the Superintendent in accordance with section 40.1 of the Act for the first time after the day on which this section comes into force is, for each geographic location set out in subsection (3), the market value — expressed in dollars and as a percentage of total assets — of plan assets invested in each class of assets set out in subsection (4) at the end of the plan year that ends after January 1, 2022 but before January 2, 2023, the one that ends after January 1, 2023 but before January 2, 2024 and the one that ends after January 1, 2024 but before January 2, 2025.

(7) The information referred to in subsections (2) and (6) is to be presented, as applicable, by the assets relating to defined benefit provisions and, as applicable, by the assets relating to defined contribution provisions for each plan name, in the case of multi-employer pension plans, or for each employer, in the case of any other plan, and aggregated for all plans.

(8) The information referred to in subsections (2) and (6) may be published in paper or electronic form.

Coming into Force

2 These Regulations come into force on the day on which section 184 of the Budget Implementation Act, 2024, No. 1, chapter 17 of the Statutes of Canada, 2024, comes into force, but if they are registered after that day, they come into force on the day on which they are registered.

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